The rupee depreciated 6 paise to 82.81 against the US dollar in early trade on Tuesday as a negative trend in domestic equities and firm crude oil prices weighed on investor sentiments.
Forex traders said the rupee is trading lower on strong dollar and foreign fund outflows over the past few days.
At the interbank foreign exchange, the domestic unit opened at 82.80, then touched 82.81, registering a decline of 6 paise over its last close as the RBI monetary policy committee meeting begins on Tuesday. The policy decision will be announced on Thursday.
On Monday, the rupee had settled 6 paise higher at 82.75 against the dollar.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.28 per cent to 102.33.
Brent crude futures, the global oil benchmark, rose 0.12 per cent to USD 85.44 per barrel.
Rupee is trading in a narrow range and volatility remained low ahead of the RBI policy statement that is scheduled to release later this week, traders said.
Expectation is that the central bank could keep rates on hold but commentary will trigger volatility for the currency, said Gaurang Somaiya Forex and Bullion Analyst at Motilal Oswal Financial Services.
Comments on inflation will be importantly watched and that could provide cues to the rupee, Somaiya added.
On the other hand, the dollar too traded in a range following lack of cues from the US.
"Today, focus will be on the trade balance number from the US; better-than-expected data could support the dollar at lower levels. We expect the USDINR(Spot) to trade sideways and quote in the range of 82.50 and 82.90," Somaiya added.
In the domestic equity market, the 30-share BSE Sensex was trading 65.93 points or 0.10 per cent lower at 65,887.55. The broader NSE Nifty declined 14.10 points or 0.07 per cent to 19,583.20.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Monday as they offloaded shares worth Rs 1,892.77 crore, according to exchange data.
Except for the headline, this story has not been edited by The Telegraph Online staff and has been published from a syndicated feed.
